Canadian e-retail sales are set to grow 10% annually through 2018

By Allison EnrightEditor

E-retail sales in Canada will grow 10% annually over the next five years, Forrester says.

E-commerce sales in Canada will grow at least 10% annually over the next five years, topping C$33.8 billion ($32.8 billion) in 2018, up from the C$20.6 billion ($20 billion) this year, according to a forecast from Forrester Research Inc.. Online sales as a proportion of total Canadian retail sales will grow to 10% in 2018 from 7% this year.

Forrester says several factors will spur the growth. It expects Canadians who shop online will increase their annual spending on the web by more than 37% between 2013 and 2018, from C$1,130 ($1,097) now to C$1,552 ($1,507) in 2018. And more Canadians will shop online. 64.6% of Canadians buy products online today; that proportion will reach 69.9% in 2018, Forrester says.

Canadians are shopping more online because there are more Canadian e-commerce sites offering access to products in more categories than in the past, Forrester says. “Things are slowly improving in Canada,” writes Forrester analyst Peter Sheldon in Forrester’s “Canadian Online Retail Forecast, 2013 to 2018.” It is U.S.-based retailers largely leading the way. “New entrants like Target.ca are improving online access to household goods, while retailers like BestBuy.ca now sell a wide assortment of products from musical instruments to health and beauty to outdoor and travel products—all of which are exclusively available online,” Sheldon writes, referring to two U.S.-based retail chains.

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U.S.-based retailers are also making it easier for Canadians to shop their sites. Some operate .ca sites just for Canadian shoppers and some offer fulfillment and delivery options that make online shopping more attractive for Canadian shoppers. For example, Amazon.com Inc., which operates Amazon.ca in Canada, made Amazon Prime two-day shipping available to Canadians in January. Sears Canada Inc., the Canadian arm of Search Holdings Corp., offers consumers who shop Sears.ca the option of having their online orders shipped to more than 1,400 Sears stores in Canada for pickup.

Of the 500 largest e-retailers selling to consumers in the United States or Canada, 283 offer shipping to Canadian addresses, according to Internet Retailer’s Top 500 Guide. Forrester says 68% of Canadian online shoppers have made purchases from retailers outside Canada. “Frustrated at the inability to find what they are looking for online in Canada…these Canadians are diverting online dollars into foreign markets,” Sheldon writes.

A dozen of the e-retailers ranked in the Top 500 Guide are based in Canada, the largest being apparel and yoga gear e-retailer Lululemon Athletica Inc., No. 122. A handful of major Canada-based retailers have lagged in making online shopping options consistently available, Forrester says, and that has held back growth.